Reclassified statement of financial position

The reclassified statement of financial position of Terna S.p.A. at December 31, 2009 and December 31, 2008 is shown below.

In millions of euros Dec. 31, 2009 Dec. 31, 2008 Change
Net non-current assets      
Intangible assets and goodwill  264.8   255.8   9.0 
Property, plant and equipment  5,976.3   5,415.6   560.7 
Financial assets (1)  581.2   220.7   360.5 
Total  6,822.3   5,892.1   930.2 
Net working capital      
Trade receivables (2)  379.8   239.8   140.0 
Inventories  11.7   16.6   -4.9 
Other assets (3)  12.1   13.7   -1.6 
Trade payables (4)  386.9   320.1   66.8 
Payables for pass-through energy items, net (5)  303.4   88.1   215.3 
Tax liabilities, net 6)  -8.2   -24.7   16.5 
Other liabilities (7)  265.4   250.3   15.1 
Total  -543.9   -363.7   -180.2 
Gross invested capital  6,278.4   5,528.4   750.0 
Sundry provisions (8)  549.3   546.3   3.0 
Net invested capital  5,729.1   4,982.1   747.0 
Net invested capital for discontinued operations and assets held for sale  0.1   0.0   0.1 
Total net invested capital  5,729.2   4,982.1   747.1 
Equity  2,468.3   2,028.0   440.3 
Net financial debt (9)  3,260.9   2,954.1   306.8 
Total  5,729.2   4,982.1   747.1 

In the statement of financial position these correspond to:
(1) “Other non-current assets” and “Non-current financial assets” for the value of equity investments (€575.7 million);
(2) “Trade receivables” net of receivables for pass-through energy revenue (€797.3 million);
(3) “Other current assets” net of other tax receivables (€17.7 million) and “Current financial assets” for the value of deferred assets (€3.3 million);
(4) “Trade payables” net of payables for pass-through energy items (€1,100.7 million);
(5) “Trade receivables” for the value of receivables for pass-through energy revenue (€797.3 million) and “Trade payables” for the value of payables for pass-through energy items (€1,100.7 million);
(6) “Other current assets” for the value of other tax receivables (€17.7 million), “Other current liabilities” for other tax payables (€7.1 million), and “Income tax assets” and “Income tax liabilities”;
(7) “Other non-current liabilities”, “Current financial liabilities” and “Other current liabilities” net of other tax liabilities (€88.3 million);
(8) “Employee benefits”, “Provisions for contingencies and charges" and “Deferred tax liabilities”;
(9) “Long-term loans”, “Current portion of long-term loans”, “Short-term loans”, “Non-current financial liabilities”, “Cash and cash equivalents”, “Non-current financial assets” for the value of the loan to TELAT and fair value hedge derivatives (€500 million and €123.2 million, respectively) and “Current financial assets” for the value of short-term securities (€500.0 million).

The €930.2 million increase in net non-current assets over the figures at December 31, 2008, is attributable to the following:

  • intangible assets and goodwill, which posted an increase of €9.0 million due mainly to the combined effect of:
    • investments, for an increase of €40.6 million, related in particular to the development and upgrade of software for the remote control dispatching system (€9.9 million), for the Power Exchange (€4.7 million), and for the protection of the electrical system (€2.1 million), as well as software and licenses for general use (€17.2 million);
    • amortisation for the year (€31.0 million, €5.6 million of which related to the amortisation of the Italian transmission and dispatching concession).
  • property, plant and equipment, which increased by €560.7 million.

The following is a breakdown of the changes in property, plant and equipment for the year:

In millions of euros  
Investments  
Transmission lines  316.9 
Transformer stations 377.9  377.9 
Other  136.7 
Total investment  831.5 
Depreciation  (248.4) 
Disposals, impairment losses and other changes  (22.4) 
Total  560.7 

Therefore, the increase (€560.7 million) is the net effect of new capital expenditures (€831.5 million), depreciation (-€248.4 million) and disposals, impairment and other net reductions (-€22.4 million) during the year.

Total investments made by the Company during the year came to €872.1 million (€831.5 million of which in property, plant and equipment and €40.6 in million intangible assets), up 14% from the €764.9 million of 2008.

  • Financial assets, which increased by €360.5 million due mainly to:
    • the acquisition of the entire share capital in TELAT S.r.l. in April in the amount of €1,157.7 million; this equity investment was then reduced following reimbursement of the share capital of the subsidiary in the amount of €600.0 million;
    • recognition of the joint venture equity investment in the Tunisian firm ELMED ÉTUDES (in the amount of €0.7 million);
    • the acquisition (for €2 million) of additional shares in the associate CESI, which were acquired from A2A S.p.A. (1.871%) and Siemens S.p.A. (4.68%);
    • the sale of the equity investment in Terna Participações (down €210.8 million);
    • capital contributions by shareholders in the amount of €10.0 million for the subsidiary SunTergrid (formerly InTernational).

 

Net working capital came to a negative €543.9 million and generated €180.2 million in liquidity during the year related essentially to the following:

  • trade receivables: the increase of €140.0 million over 2008 is due essentially to:
    • the greater grid transmission fees paid to the Company and to the other owners for transmission activities (€92.9 million) related largely to the recognition of the amounts receivable from the Electricity Equalisation Fund for the mitigation mechanism for the full year as established by Resolution no. 188/08 (€61.0 million, including the amount recognised for TELAT’s portion of the NTG for the last nine months of the year), as well as to the receivable for the portion of grid transmission fees receivable by TELAT (€23.1 million) related to November and December;
    • the receivable from dispatching withdrawal operators under Resolution no. 206/08, which introduced the incentive mechanism connected with the optimisation of resources for the services provided on the Ancillary Services Market (€40.0 million);
    • trade receivables from subsidiaries (€10.1 million) related to the contracts for the coordination and operations of the Italian subsidiaries TELAT and SunTergrid;
  • trade payables: the increase in trade payables (€66.8 million) is due to purchases of goods and services for the increase in investment during the fourth quarter as compared with the fourth quarter of 2008 (€51.8 million), as well as the payable from TELAT for the pass-through portion of grid transmission fees due for December and for the effects of Resolution no. 188/08 for the last nine months of the year on the portion of the NTG owned by this subsidiary (a total of €15.0 million);
  • net payables for pass-through energy items: the increase (of €215.3 million) is due essentially to the reduction in receivables for the uplift fee (about €193 million) as a result of the positive financial effects of the balancing payments for dispatching fees, as well as the reduction in payables for procuring resources on the Ancillary Services Market generated by efficiency gains in managing forecasts;
  • tax liabilities: the increase of €16.5 million is due mainly to the increase in taxes payable for estimated income taxes, net of advances paid (€42.5 million), which was partially offset by the capital gain tax paid as per Legislative Decree no. 185/08 for the purpose of the redemption of goodwill resulting from the merger of RTL (€14.2 million), as well as by the increase in VAT receivable (€10.0 million);
  • other liabilities: this item increased by €15.1 million due mainly to the increase in amounts payable to employees (€11.1 million) and to social security institutions (€5.0 million), as well as to the adjustment of the portion of the Company’s grid transmission fees deferred to future periods to compensate for the future costs related to the NTG safety plan (€6.8 million), which was partially offset by the decrease in deferred liabilities on interest expense accrued on financial instruments and related hedges (€6.5 million).

As a result, gross invested capital came to €6,278.4 million, for a €750.0 million increase over December 31, 2008.

Sundry provisions, in the amount of €549.3 million, increased by €3.0 million due essentially to:

  • use, for the relevant portion of the year, of net deferred taxes recognised on previous accruals for amortisation and depreciation in excess of ordinary amortisation and depreciation rates (€21.5 million) and on the greater amounts allocated to RTL’s portion of the NTG in conjunction with the merger of this subsidiary (€2.3 million); it also includes the release of the portion (€8.7 million) of deferred tax provision for IRAP as per Law no. 244 of December 24, 2007 (the 2008 Finance Act);
  • the release of the energy discount provision, net of the related tax effect, in the amount of €19.4 million as a result of signing the agreement with Enel Servizio Elettrico aimed at redefining the set of beneficiaries;
  • net allocations to provisions for contingencies and charges (€21.2 million) for “Projects for urban and environmental renewal” aimed at offsetting the environmental impact of building power lines;
  • the recognition of probable charges related to contractual and fiscal obligations resulting from the sale of the equity investment in Terna Participações (€42.4 million).

At December 31, 2009, total net invested capital came to €5,729.2 million, for an increase of €747.1 million over December 31, 2008.
This amount is funded by equity in the amount of €2,468.3 million (as compared with €2,028.0 million at December 31, 2008) and by net financial debt of €3,260.9 million (up €306.8 million from December 31, 2008).

The following is a breakdown of net financial debt:

In millions of euros Dec. 31, 2009 Dec. 31, 2008 Change
Long-term debts and related hedging  4,218.3   3,642.8   575.5 
Short-term loans and investments  -460.0   0.0   -460.0 
Cash and cash equivalents  -0.1   -689.2   689.1 
Financial transactions with subsidiaries      
Loan to TELAT  -500.0   0.0   -500.0 
Net position on the intercompany treasury account  2.7   0.5   2.2 
Total financial debt  3,260.9   2,954.1   306.8 

For a breakdown of the individual components of this net debt at December 31, 2009, see “Cash flows” below.

As a result, the debt-to-equity ratio at the end of 2009, taking account of the contribution of the sale in Brazil to 2009 earnings, came to 1.32 (compared with 1.46 at December 31, 2008, which does not include said effect).